Sales and Use Tax in Convenience Store

In Texas, like other states, customers can partake on many convenience store goods without parting with a fraction of their money in the form of taxes. Under the state’s tax laws, food and other items are tax-free. However, tax is due on many other products sold in convenient stores, including beauty, hygiene, and clothing items. It’s all a little too convoluted for store owners to understand, and most often end up inadvertently charging their customers extra on products that shouldn’t be taxed.
As mandated by the Texas tax law, convenience stores that don’t have a reception area or restaurant to sit down cannot charge sales taxes on food items. Under that umbrella, falls condiments, snacks, dairy products, and other things.

It’s a costly confusion for consumers and store owners

It’s not all black and white, however, as most store clerks have found out. Some food items, including soft drinks, energy drinks, and prepared foods, are taxable. For most convenient store owners, a lack of clarity on the matter means that their registers would come out wrongly made, automatically adding sales tax to goods that consumers should be enjoying freely.
The difference could be no more than a few cents, but that paltry sum adds up too quickly over time. Think of seven cents saved on all non-taxable items in a year’s shopping. For the whole of Texas, that could add up to millions of dollars, money that goes up into thin air. No one is sure whether the state stills gets the wrongly charged sales taxes.

Texas State Audits on Convenience Stores

The Texas government comptroller conducts regular checks to ensure that convenience stores aren’t charging consumers extra taxes. The success of these audits, however, depends on the consumers’ boldness to report the cases and request reimbursement. Most consumers are no doubt muddle-headed on the state’s convenient store items tax laws, and the government’s supposed protection could well be non-existent.

So, how does one know what is taxed and shouldn’t be taxed in a convenience store? Both clerks and customers have to be keen, one on their registers and the other on their sale receipts. A bottle of soda would be taxable, but not bottled water. Ice is taxable, but ice cream isn’t. Is there an easy to understand the formula used here?
Sadly, no; everyone should acquaint themselves with the extensive information available on the Texas Comptrollers website. There is a comprehensive list of taxable versus non-taxable convenient store items outlined there. Below is a summary list.

Sales Tax

First off, the sales tax is a tax due on the sale, exchange, or transfer of a taxable product or service. It is often added to the purchase and charged on the consumer. On the other hand, the use tax is the amount charged on the storage, use, and consumption of a taxable item for which no sales tax has been charged.

Non-taxable convenient store items in Texas

• Bakery items: The state doesn’t collect taxes on goods such as bread, cookies, tortillas, and doughnuts, among others, unless they are served on utensils.
• Over the counter medicines: Store owners shouldn’t charge taxes on OTC drugs and medicines that are labeled with a Drug Facts Panel as a requirement by the FDA.
• Coffee, tea and dairy products: Unless sold as beverages in a cup or glass, these items are not taxable
• Newspapers: Papers that are sold at an average of $ 3.0 and provide general interest news are nontaxable
• Lone Star Card and Food Stamps: Any items that can be bought with a Lone Star Card are not taxable
• Baby Products such as packaged milk, formula and medicines.
• Baking supplies such as cake mixes, leavening agents, cornmeal, cooking oils, and others
• Condiments and spices such as mustard, herbs, pickles and salad dressings among others

Other non-taxable item include:

• Meal replacements
• Eggs and egg substitutes
• Grains and pasta
• Ice cream and ice cream sundries sold in pre-packaged units
• Meat, poultry, and fish
• Nutritional supplements, frozen meals, meal replacements, and breakfast bars

Taxable Items in Texas

• Beer and wine
• Candy and gum
• Ice and dry ice
• Soft drinks and energy drinks
• Photo processing products such as prints and negatives
• DVD rentals
• Books and magazines
• Phone cards
• Prepared food items
• Beauty products and housewares
• Clothing items
• Electrical supplies and school items
• Hardware, furniture, and sports equipment
• Utensils, glassware, and silverware

Sales and use tax in convenient stores can be exasperatingly complex to understand. The exemptions and inclusions are all arbitrary. Nonetheless, store owners and consumers should seek this knowledge or even have a confirmation list at the point of purchase for efficiency and cost-saving.